Good day, ladies and gentlemen, and welcome to the XOMA Corporation's third quarter 2014 financial results conference. (Operator Instructions) I would now like to introduce your host for today's conference, Ms. Ashleigh Barreto, Investor Relations at XOMA. You may begin.

Thank you, operator, and good afternoon, everyone. Joining us on the call today are John Varian, Chief Executive Officer; Paul Rubin, Senior Vice President, Research and Development and Chief Medical Officer; and Fred Kurland, Vice President, Finance and Chief Financial Officer. Before we begin, I'd like to remind everyone that this conference call will contain forward-looking statements about the company. These statements are subject to risks and uncertainties that could cause actual results to differ. Please note that these forward-looking statements reflect our opinions only as of the date of this call. We will undertake no obligation to revise or publicly release results of any revisions to these forward-looking statements in light of new information or future events. Factors that could cause our actual results or outcomes to differ materially from those expressed in or implied by such forward-looking statements are discussed in greater detail in our most recent filings on Form 10-K or other SEC filings. I'd now like to turn the call over to Fred.

Thank you, Ashleigh, and good afternoon, everyone. We appreciate you joining us today. We continue to focus our resources on advancing our gevokizumab clinical development programs. The majority of our effort is allocated towards the EYEGUARD Phase 3 program, which now has four Phase 3 trials enrolling patients, and the newly launched gevokizumab Phase 3 program for pyoderma gangrenosum. All of our actions are designed to ensure we achieve our goal of seeing XOMA become a commercial operation, selling products to the specialist prescriber in the United States. So let's turn our attention to the financial results. For the three months ended September 30, 2014, we recorded total revenues of $5.1 million compared to $6.3 million during the corresponding period of 2013. Reimbursements from our cost sharing collaboration with Servier are booked as revenues and is the primary driver of the $1.2 million decrease in revenue. Under our agreement, Servier paid the first $50 million of all non-infectious uveitis development cost, after which all costs are shared equally between the two partners. We reached that $50 million spending level during the third quarter of 2013. Since that time, each partner has incurred non-infectious uveitis costs that are approximately equal to each other, resulting in a reduction in the reimbursement from Servier. Our third quarter 2014 research and development expenses were $20.2 million compared to $18.2 million in the corresponding 2013 period. The increase reflects higher clinical trial costs associated with XOMA's gevokizumab clinical development programs and increased personnel costs, including an increase in stock-based compensation, partially offset by decreases in spending in external manufacturing related to the timing of activities performed and preclinical development. Our selling, general and administrative expenses were $5.4 million and $5.2 million for the 2014 and 2013 quarters, respectively. The increase reflects an increase in stock-based compensation. For the third quarter ended September 30, 2014, XOMA had a net loss of $14.4 million, which included a $5.7 million gain in the non-cash revaluation of contingent warrant liabilities. Excluding the revaluation, our net loss for the third quarter would have been $20.1 million. In the quarter ended quarter September 30, 2013, we had a net loss of $29.6 million, including an $11.1 million charge in non-cash revaluations of contingent warrant liabilities. Without the revaluation, the 2013 third quarter net loss would have been $18.5 million. At September 30, 2014 we had cash, cash equivalents and short-term investments of $59.1 million compared to $121.6 million at December 31, 2013. Our third quarter cash burn was on target with our internal expectations and we are on target with our full year guidance of an operating burn of $55 million to $60 million for the full year. The guidance assumes license and contract related revenues to be received prior to yearend. I'll turn the call over to John for an overview of our operational highlights for the quarter. John?

Thank you, Fred. I'd like to thank everyone for joining us today. Throughout 2014 we've taken steps toward driving toward our goal of transforming XOMA into a commercial organization that markets its products to the specialist prescriber in the U.S. In addition to our ongoing Phase 3 studies in Behçet's uveitis and the broader non-infectious uveitis patient populations, earlier this week we announced the launch of our second Phase 3 clinical program in patients with pyoderma gangrenosum. This is a rare disease of painful expanding necrotic skin ulcers. We know many of you anxiously await the results from Servier's Phase 3 EYEGUARD-B study in patients with Behçet's uveitis. We too look forward to these results from the specific patient population, as gevokizumab has generated consistently positive data in both Servier's and our Phase 2 studies. As we said, we will announce when the final exacerbation in Servier study occurs. This event will allow Servier to unmask the data, which we should be able to report to you about six weeks later. As I have said in the past, this is finger of God stuff. We cannot control when the final exacerbation will occur. We believe we're nearing the goal line, but we're not there yet. As we've said though, we are not waiting. We continue to move forward with the activities that will allow us to pursue Behçet's disease uveitis as our first BLA submission for gevokizumab. Specifically, we are preparing analyses of the previously generated gevokizumab Phase 2 data in Behçet's uveitis patients, such that it can be supportive of the EYEGUARD-B pivotal study. We also initiated the supplemental EYEGUARD-U.S. study in September. Paul and I will discuss the study design and potential role for you today. Once we have the EYEGUARD-B data results in hand, assuming of course…

Thanks, John, and good afternoon, everyone. As John said, over the last few months, we spend a great deal of time with our friends at Servier to be sure we understand the status of EYEGUARD-B. They have predicted that the final targeted exacerbation would occur in June. This prediction was based on the fact that approximately 75% of the targeted number have occurred by early May, and the rate of exacerbations appear to be occurring at a fairly predictable rate. Now, four months later, we still await the final exacerbations to occur. We think it's important to convey to you what we've learned and why we are encouraged by our learnings. Let me start by reminding you of what an exacerbation is, as defined in the protocol. An ocular exacerbation is any one of the following in either eye: a 2-unit worsening in vitreous haze score using the SUN scale; a greater than or equal to 15 letter decrease in best corrected visual acuity; an emergence of retinal infiltrates or acute retinal vasculitis. These criteria defining an exacerbation were determined in conjunction with multiple experts and regulatory disease, and each represents a relative decrement in the status of Behçet's disease uveitis. Another important reminder is that this is a steroid tapering study. Patients are randomized only when they are receiving 20 milligrams of prednisone or its equivalent. They are tapered to 5 milligrams using the JAB standardized procedure on a very specific schedule over an approximately three month period. Thus, this tapering schedule is identical for every randomized patient. What we're looking for, our exacerbations, as I just defined, during a very exact steroid tapering process. The predetermined number of targeted exacerbations as defined by the protocol are these specific exacerbations, which I'll refer to in my comments as per…

Thanks, Paul. I'd like to share a piece of good news from Servier. The EMA granted gevokizumab orphan drug designation in Schnitzler Syndrome, a disease characterized by long-term hives, abnormal amounts of certain proteins in the blood, recurrent fever, bone and joint pain and swollen lymph nodes. It's a long-term debilitating and life threatening disease that may lead to complications including severe anemia, AA amyloidosis and disorders where white blood cells are produced in excessive amount. The disease usually appears during adulthood and affects approximately a 1,000 people in the EU. Schnitzler is one of several indications Servier is studying in its independent proof-of-concept program. They also have proof-of-concept studies ongoing in polymyositis, dermatomyositis and giant cell arteritis. A full Phase 2 cardiovascular study is also underway. Their commitment to gevokizumab is strong. They have said, it is their only completely new NCE or biologic in Phase 3 testing and it is important to their future success. We await the EYEGUARD-B Behçet's disease uveitis Phase 3 trial to hit the targeted number of exacerbations that allow Servier to unmask the primary endpoint. Hopefully, Paul's comments conveyed how crucial it is to gain as many protocol exacerbations and rescues as possible in this study, allowing the time and events to hopefully separate the placebo, and gevokizumab-treated arms can only strengthen the final result, if gevokizumab is in fact helping these patients. We must remain mature and remember that what matters most is the ultimate trial result. We believe that to this goal, time really is on our side. But we are not waiting, our Behçet's first strategy allows us to have more control over our fate and we are aggressively acting to pull all the things in place necessary to ensure that if the EYEGUARD-B study results are positive, they can lead us to a successful BLA submission. Our team is also doing everything possible to drive enrollment in EYEGUARD-A and C and to allow access to the broader NIU population as quickly as possible. Our launch of the pivotal study of gevokizumab and pyoderma gangrenosum opens a potential new therapeutic area for gevokizumab. In the past 12 months, we've taken steps to drive XOMA closer to transforming into commercial organization that markets products to the U.S. specialist prescriber. Our success in commercializing gevokizumab in any of these indications will support the development of the exciting compounds that are in our pipeline like XOMA 358, the first of many discovered and developed in XOMA's lab. We have taken control of our destiny and we're now executing on our strategy. Thanks for joining us. And I'll now open up the call to questions.

(Operator Instructions) Our first question comes from the line of Ted Tenthoff of Piper Jaffray.

I appreciate the update and looking forward to hearing more on the exacerbation in EYEGUARD-B. I guess, just looking at PG, you guys probably know more about these patients at this point than anyone out there. How quickly do you think this could enroll? How many patients are these centers currently seeing? How should we be thinking along those lines?

It's really difficult when they ask, because the study like this has never been done before. So we're trying to obviously pre-scheme centers that we look in their databases to make sure they see appropriate numbers. Now, these patients, obviously it's not huge numbers, but many of our investigators see anywhere up to a half of dozen of these patients a year and in total we're looking to have about 60 centers worldwide enrolling. But to give you more specific answers, we really need some history before we can answer that at this point in time.

I was just going to say, Ted, what's interesting is if we just listen to what we hear we give you a really rosy answer, but the problem is, is as we learn, physicians are always very positive about how many patients they have and that's everything until the rubber really hits the road and you really start seeing enrollment, it's harder to judge. So we're just trying to be careful as to how we communicate that.

And the other side unlike uveitis, as far as we know there are no competing trials. So any patients coming to these centers, the doctors don't have to decide, which trial to put them into.

One quick question for Fred, if I may. I probably should know this, but at this point, what is it that does go into the contract in the other line? Is that mostly stuff from Servier or what's going into that line now?

It's really two items, Ted. It's our ongoing bio-defense business, which is series of contracts with arms of the National Institutes of Health, as well as the reimbursements from Servier. And as I mentioned earlier, the primary reimbursement is when there is a period of time in which we spend more money than they do on non-infectious uveitis, it just turns out that lately since last year when they hit the $50 million mark that they were fully funding, our spending has turned out to be more or less equal to each other, so the amount of reimbursement is lower than it had been in the past.

And our next question comes from Yatin Suneja of Cowen & Company. Yatin Suneja - Cowen & Company: Just wanted to clarify the number of patients that have been enrolled in the EYEGUARD-B trial. I thought initially you were planning to enroll 110 patients. So did Servier enroll more patient than 110? And then how many exacerbations are needed to complete or to unblind the trials, so that do you can do the analysis?

So the study was always designed in a way that was pre-set, which was up to 110 patients, but that was never the targeted enrollment amount. 110 was the maximum that could be enrolled, and there was a target enrollment amount that was believed to be the right amount to hit the exacerbations that are needed to be able to unmask the study. Servier actually hit that targeted enrollment amount that was believed to be the right amount to be able to unmask the study in the second quarter of this year. Then what happened is, as Paul hopefully explained in very good detail, so that was understandable. What happened was, we started seeing a big slowdown in the number of exacerbations, which again is somewhat troublesome, but at the same time could be very good news. And that you do hope there, as you end up with more patients under control for whatever reason, whether it's drug or not, you would expect that you have a slowdown in the number of exacerbations. That's what we experienced, Servier experience. And so since that point in time, once that was seen and we had hit the total number of targeted exacerbations, Servier has begun to kick back up the number, the enrollment of patients into this study. We do know that when patients first start in the study, that there is a high percentage of exacerbations pretty quickly. And so that's what we should be seeing here pretty soon, so we can get to the full target. We've never been able to disclose the targeted number of exacerbations and we cannot disclose that, but what we can tell you is we're getting near to that number. And we hope that with these newly enrolled patients, again with the expectations that these patients at a high percentage exacerbate pretty quickly then we should get to that number. Yatin Suneja - Cowen & Company: And then, maybe just one more. Could you also talk about like other secondary endpoints that you think are important, and then that could make gevo more attractive to physicians and drive uptake?

So I think the sensitivity analysis that Paul talked about is probably the most important one. So maybe we could talk about that a little bit, but then in addition to that Paul, some of the other secondary endpoints.

At least for understanding the difference between placebo and active that sensitivity analysis becomes important because, as I hope to explain that we had a defined exacerbation, but there are inflammatory-related events that could have been treated by the drug and that will better help us understand. But in addition to looking at time to exacerbation, we're also looking at numbers of exacerbation over a longer period of time. So in fact, if the patients even after they exacerbate, they continue to unblind the therapy. And we could then quantitate the number of exacerbations they have throughout a one year period. So we're hoping that not only do we show a longer time to first exacerbation, but we see fewer exacerbations over the course of the year, because that also would be very important for uptake of this drug. I think those are probably the two main events I would look.

And our next question comes from the line of Jason Kantor of Credit Suisse.

I guess I have two big questions. One, did you design this trial correctly given how the doctors are choosing to essentially break protocol in order to I assume provide the patients with appropriate treatment. It would seem that that's a design flaw? Maybe you can comment on that? And second, now that you know in some detail, what the exacerbation rate is? And you also understand that you had this headwind of reclassifications, which is now gone. You really ought to know or be able to estimate or provide some sort of guidance as to when you would hit those exacerbations at this point, now that you've worked through all of those unknown. So my question is why are you not providing us with guidance on that, now that you've worked through what seems to be a whole lot of information?

Let me answer your first question. It's absolutely not the wrong design. The definition of exacerbation is defined by regulatories agencies and experts, so we absolutely have to use their criteria, and that's what's considered to be relevant. And this is in all studies of severe disease. It's absolutely within ethical guidelines to allow them to treat patients when they feel they must. So to have designed it any other way would have been unethical. And importantly both types of events do get captured, when it comes to how the results were analyzed.

And, Jason, your point on, when we can estimate, when it can be done? That's a completely fair statement. At the same, we could wait and I'm not saying that's happening today, but we could wait for the very last one to happen and it could take a day, it could take a week, it could take a month. So you can predict a rate and we see a rate, Servier had a good prediction on rate, but you know what, if patients stay under control for a longer period of time, than they expect it and you hope they're on drug, well then that happens, right. So, yes, we can predict it, but you know what, the last event is going to happen when the last event happens. And so when it does, we'll tell you that it's happened. And again, the longer the study runs, if there has been a separation between the drug-treated group and the placebo-treated group, the longer the study runs and we should end up with a better separation between the groups. So we don't know the results, but the longer the study runs, the more powerful our separation should look.

Well, the more statistical power you have.

So in terms of events, are you basically where you were in May in that? I think I hared you say that the number of new events has basically been directly offset by reclassification of events.

We didn't say that. But what we can say is that, any events that we had lost have been made up. And I cannot be more specific than that today.

Can you give me an example of how you might analyze the data to capture? Let's come up with a scenario where you don't hit your endpoint, for example, or where you're very close or either just making and are just missing it, and you've got this huge amount of data, which is patients who were rescued separately. How does get included in an analysis and how might FDA look at that?

What FDA does in all studies is all patients that have discontinued therapy, they will assume as if they have failed, and that's essentially the sensitivity analysis. So in this instance, even though they might not have met per-protocol definition of exacerbation, the sensitivity analysis will include all patients as if they exacerbated in their sensitivity analysis, which is commonly done. Now, in this instance, what we're seeing is that patients are rescued even though they didn't meet strict criteria, because of what appears to be inflammatory events. Things like they might have had a change that didn't quite meet the actual standard or they had macular edema, which is inflammatory event, but not part of the definition. They might have had symptoms of Behçet's disease that are not related to the eye. For example, mouth ulcers or genital ulcers that also might have flared because of lack of effective therapy. So when those get put back into the sensitivity analysis that will be captured.

I guess I'm just struggling with, is this something that other people have seen running these trials? I don't understand why these flares and treatment changes, when they're captured in the primary endpoint.

This is pretty much yet in terms of Behçet's uveitis control trials. That's control trials. I don't think there has been any other control trails that I am aware of that are done. So again, we try to design this as best we can, knowing the natural history from both literature and from asking experts.

Well, that's why I go back to the -- is it right design because their endpoint doesn't have to be that endpoint. It could be a different endpoint.

Yes, fair enough. But believe me, this was not -- the decision to design this trial was not taken lightly. It was discussed with probably every expert in Behçet's uveitis in the world as well as both FDA and EMA. So considering all the constraints on what you can remember, this is a very serious disease and you can't be on active disease, for example, cannot be on placebo for protracted periods of time.

I understand that. But when people look at this result with all these experts sit around and look at this trial and the way it played out, will they held this as the right way to run trials in Behçet's or will they look back at it and say, well, we probably should have included up steroid doses in exacerbation or some other way of looking at it, some other composite based on the fact you're getting so many people not dropping out as a result.

I'm not sure it's so many. I think it's probably more than predicted. But again, the initial predictions were based on best assumptions going forward. And as we go through the study we're evaluating what even those assumption should be.

But I mean, Jason, the point is these per-protocol exacerbations are the most strict definition of what an exacerbation could be. And that's what it needs to be, as it should be. And we're also capturing any of those potential inflammatory events underneath, so we'll have all the data. In fact, the one that's combined and you can almost think it was an intent to treat. But the definition that was required for this study, be the most strict of does your drug separate from placebo, is the most strict example or definition that you could have. And that's what it should be in this study.

And we always have this discussion, do you want to liberalize criteria to expedite the trial. And yes, you could increase enrollment and expedite the trial, but then you lose power. So you don't gain anything by doing what you suggest.

I am just saying that there should be -- ideally you run the study and the vast majority of patients make it to an endpoint I guess would be, which seems to have -- well, anyway, we'll wait and see that data.

That's how the question will be answered when the study is complete.

And our next question comes from the line of Adnan Butt of RBC Capital Markets.

So sort of a follow-up based upon your experience with Behçet's, what are your thoughts on the trial design for Behçet's U.S., is that embedded by the FDA as well, and what's the best estimate for timeline in therapies?

Again, the design itself has actually been seen by FDA and it's completely acceptable from a regulatory perspective. It's a little different and that this is a withdrawal design, and again its something that I think was doable in the United States. This design was floated by EMA and EMA has some issues with it, just again from an ethical perspective. So we think it's a really good design and it's accepted by FDA. It allows us to enroll as many patients as we possibly can. The timing again, it's really hard for us to predict, because it's never have been done in the United States before. So we can't look at previous Behçet's studies in the U.S. and say, this is how long it takes to enroll, because it just has never been done before.

Yes. It's important to reiterate, though we did it on the last call, but I'll say quickly here. This study design is incredibly flexible. And so the study design for EYEGUARD-U.S., it is set up in a way that, if we do not need the study results at all to have the FDA be able to review our BLA submission, we can just generate the data and be part of what we learned about the drug. If FDA says, look, we want to see interim results from that study, we'll have the interim results at whatever state-of-the-art, we'll be able to provide to them. And then we also designed it such, that if it needs to be a pivotal study, which we do not believe there is president, and would say that for this kind of an indication, with this patient population and the severity of the disease, that we should needed it as a second pivotal study, but if we do, it's doable that way too. So it's a very flexible study that can we think meet any demand that the FDA would put on us around that study. And we wanted to get it started in September, again in an answer to your question, because we wanted to have the most time possible to take it as far as we can, as we get that feedback from FDA.

I guess, the question was also asking, if there is any safeguards built into this protocol to kind of circumvent with the EYEGUARD-B challenges?

Well, this is a randomized-withdrawal.

Well, yes, as John said before, this trial allows patients who either have active disease or are controlled to enter the trial. So that already expands the potential universe of patients that could be enrolled. We're also allowing patients to have been treated or be on other therapies at the time they go into the screening portion of the trial, which also increases the universe of where we can go for it. And we're not waiting for them necessarily to come down to a specific level of steroid, and they don't have to be on steroid at all to be in this trial. So again, I think what we tried to do knowing that we have a smaller number in the United States of Behçet's in general is to expand the entry characteristics to enhance the probability of enrolling in the trial.

And there is one other subtle difference. I don't want to go too deeply into it, because it's little bit much disclosure. But at the point in time that these patients are randomized, they've already been tapered on steroids pretty significantly to the point where if that's steroid tapering schedule going forward won't be part of the mix for the physicians.

Will confound the ultimate affect.

And our next question comes from the line of Phil Nadeau of Cowen & Company. Phil Nadeau - Cowen & Company: I just want to go back to the primary endpoint to make sure I understand and I think I'm actually asking the inverse of Jason's question. So just to understand the primary endpoint, you're comparing the time to per-protocol exacerbations for the treatment group versus the time to per-protocol exacerbations for the control group in patients that didn't follow the protocol, whether they were rescued too early or the doctors didn't taper on time, those patients were excluded from that analysis, so there is really no penalty for you statistically because of those patients?

Well, they are included in the analysis, but only up to the time that they've received rescue. So once they receive rescue, there data are no longer contributes. Although they also -- you've seen Kaplan-Meier analysis where each time there is an event, the curve drops. So in this case their data is included in the number of patients that are in the analysis up to the time they're rescued, but they're not counted as an exacerbation, so the line doesn't drop at that point in time. You don't loose power, because we're still going to end the study when we have the requisite number of exacerbations. And as John said, the patients that are on for longer, the longer it goes, if those patients are on active drug, the more statistical power you gain. So in some ways you have a better chance of success should the distribution of drug versus placebo is correct, the longer we wait for that exacerbation to occur. Phil Nadeau - Cowen & Company: But the fact that they're censored, it's not like a rescue is considered an exacerbation. It's basically [Multiple Speakers].

No. It's not considered as an exacerbation. Phil Nadeau - Cowen & Company: And then second on other measures you're taking, it does sound like physicians want some understanding of the impact of gevokizumab on anatomical changes, things like the leakiness of vessels or OCT readings. Are you doing any angiograms or OCT readings in the study to assess the impact of gevo on those other characteristics of uveitis?

Yes. They are being done. Although, the fluorescein angiography is not the primary endpoint, but we are doing fluorescein angiography, both in this study as well as in the NIU trials and OCTs as well are being performed.

And our next question comes from the line of Matt Kaplan of Ladenburg Thalmann.

Just to be clear, and just a follow-up with one more question on Jason entail, with respect to that study. It sounds like based on what you're saying, the study will be successful in giving us an answer one way or another. It's not going to be a null study in terms of not being able to interpret the results from what you're saying?

Well, obviously, that's what we're hoping. And to enhance the probability, it actually is giving us an answer. That's why we're going to make sure that we get the requisite number of events to occur before we break the masking and do the analysis.

So you don't think it's going to be just a study that fails to turn out an answer.

I don't think we'll see an equivocal result because of lack of patients.

Yes. Really, again time being on our side, I'm trying to be mature about these things, the ultimate result is what matters, right. And so by the time we get to the end, we will have a very high percentage of the patients who either have per-protocol exacerbations or who have been rescued, so the amount of data we're generating, and again the powering of the study or the impact on the endpoint from that amount of data should be very beneficial. So we're doing everything we can, to let this thing run, let the events happen, so we can hopefully see a separation between drug and placebo-treated patients.

And just to shift gears a little bit in terms of EYEGUARD-A and C. Now, the enrollment has been delayed in those for some time. What's your sense in terms of, can you give us a metric in terms of the number of sites that are up and running right now x U.S. and been able to add a different regions to those study to actually execute on the enrollment on the study.

Yes. So what we're seeing, Matt, is that the Servier; so in the U.S. all the sites have been open for, as you know, a long time. And the pace in U.S. is extremely steady and very predictable. And so in the U.S., we kind of know what we've got, right. The biggest variable, of course, is the non-U.S. All those key countries that we were so excited about getting up and getting the bolus from that Servier worked on those countries are open, but about half the sites in those countries are open as opposed to all of those sites, and actively screening, and so they're open, but actively screening. So now we're starting to see a pick up from Servier, but until we see a steady pace of that pick up, we don't want to get to too much more exact about predicting, but I do feel like we've got countries opened, sites getting opened, and we're starting to see a pick up, but until we see it for a little while longer, I don't want to get to specific on predicting, but we're seeing encouraging signs, at the same time it doesn't divert us from this Behçet's first strategy that we've chosen, but we're seeing encouraging signs in NIU, but not long enough and strong enough for us to be more specific than we have been.

And just a question for Fred. With obviously the expansion in timeline and you are ramping up in your R&D spend with launching of the PG studies and additional studies as well here on Behçet's U.S. study. Can you give us a sense in terms of your anticipated cash burn going forward, and especially leading into 2015? Can you give us a sense of the cash runway that you currently have on that?

It's about 12 months, Matt.

You have 12 months of cash right now?

Yes.

And our final question will come from the line of George Zavoico of MLV & Company. George Zavoico - MLV & Company: You see there is a difference between the medical exacerbations and the pre-protocol exacerbations. In technical terms, the medical exacerbations, is that considered a protocol violation?

No. It's within protocol. They have the ability to rescue any time they think it's appropriate. So it's not a protocol violation. George Zavoico - MLV & Company: It seems to me from what I understand when you were saying about the sensitive analysis, and tell me if I am on-base or off-base here, one potential outcome is that you hit on the medical exacerbations, but you don't hit on pre-protocol exacerbations. So you don't hit on the primary endpoint, but you hit on the in the sensitivity analysis, because well the sensitive analysis seems to me, meaning whether or not you have a medical exacerbation or pre-protocol exacerbation, you would hypothesize that both would happen at a higher frequency and a faster rate than with gevo?

Yes, if there is a distribution that's similar to drug versus active, if the medical exacerbations are indeed due to inflammatory event, and occur because of sub-inadequate therapy, exactly. George Zavoico - MLV & Company: So if that would be captured, would that still be acceptable to the FDA?

The FDA routinely does do the sensitivity analysis. They would do this independent of us including that within our statistical analysis plan. So they do put weight on that. And again, it depends at the end of the day in the strength of the finding. George Zavoico - MLV & Company: But it would still miss the primary endpoint?

Well, I'm not sure that's going to happen. But you're saying in -- George Zavoico - MLV & Company: I'm just saying in the hypothetical case?

I think it's a good case that this is still medically relevant, but it will up to us to make that case. George Zavoico - MLV & Company: And then because the FDA is going to look at that, and there is president for that kind of consideration on the FDA for approval.

I believe so. I believe that sensitivity analysis is an important part of the understanding the effect of the drug. And as I say, FDA generally does unprovoked. They do this on their own. George Zavoico - MLV & Company: Now, for the other EYEGUARD studies, for the NIU, could this come up in those other studies as well as being an issue?

Well, the way the studies are designed, there is only one study. Well, it can come up in any study, where the endpoint is, there will always be sensitivity analyses done in the patients that, that stop dosing without hitting the endpoint. So it is possible. But remember the EYEGUARD-A is a completely different design, that's a responder analysis, as oppose to an exacerbation analysis. And the EYEGUARD-C is also not tying two exacerbations, but it's the number of exacerbations, because there is a higher number and we have power to do that. So it's a little different endpoint.

Yes. And I think you heard in our comments around how physician see Behçet's uveitis and non-infectious uveitis that they treat the Behçet's uveitis patients even more aggressively than they do their non-infectious uveitis patients. And so it's hard to blame a physician who may see somebody's vitreous haze go up 1 or 1.5, and they're supposed to reduce the steroid to say, you know what I don't really want to do that, particularly with this Behçet's uveitis patients, right. So it's hard to criticize that as appropriate action.

But in any case, those patients that stop the study prior to hitting the official endpoint will be included in the sensitivity analysis in all of our studies. George Zavoico - MLV & Company: You also mentioned about second exacerbations. Did I hear that right? I mean is that captured as part of a secondary endpoint?

Yes. It will be total number of exacerbations over the total observation period. So you look at the time to firsts, but also total number as a secondary endpoint over the course of a 12 month period. George Zavoico - MLV & Company: So after your first exacerbation, I'm wondering if that would be a reason for the physician to perhaps change to a different therapy to see if he could stop subsequent exacerbations.

Well, the way the protocol is written for the EYEGUARD-B, even though they have an exacerbation, they are treated appropriately for that exacerbation with steroid, but they continue on double-blinded therapy. George Zavoico - MLV & Company: And so the secondary endpoint, I mean if someone comes in on gevo with one or two exacerbations in the controlled-arm it's double or triple, that that's clearly a significant difference that should be captured by the FDA considered as a potential endpoint?

In fact, there is a recent paper on Behçet's uveitis out of Japan, and they had a lot of natural history data and the mildest patients exacerbate four times a year. And some new patients exacerbate up to 10 times a year.

And at this time, I am showing there are no further questions in the queue. I would like to turn the call over to John Varian for any closing remarks.

Thanks, everyone. We've taken a lot of your timetable. We really appreciate your interest and you joining us here today. As you can tell, we've got a lot going on and we've got some really big things in front of us. It's a really exciting time. And I do know that our team is up to the task in hands. So again, thanks for joining us.